Tokenomics and Minimum PRE price ($0.07)

Community Discussions
21

This is how our biggest node operator (our CEO) is acting as node farmer…

Yesterday, he announced this on TG…

Folks, to ease concerns about the drop in rewards, my team and I will take 2,000 nodes off line, 1,000 tomorrow and another 1,000 next week.
That will offset the majority of the $1.5k reward pool reduction.

His reason…

Certainly not to save on VPS costs, since we’ve negotiated quite good quantity discounts.
We’re removing most of the stake for diversification reasons (we also would prefer to see stakes on-chain), but the amount and timing are for the project. Some we will re-stake on the remaining nodes, but not much. For most other people, I would suggest consolidating over time, but there is no hurry.

So, our CEO used to be a “node farmer” and now he is decreasing the node rewards for everyone… and now he will stop being a “node farmer”…

How can you expect node operators to hold their nodes if the CEO is dismantling “his” nodes?

Let alone, that we don’t know what he will do with the unstaked PRE…

And what about this statement?

Every node and every node runner is important, Nils.
Some of the node runners I spoke with regarding how to fix token flow are running 10.
60 is plenty! Not everyone has to do “industrial strength”!
And we appreciate the support, even if you are running a single node!
Maybe even “especially” if you are running a single node, because that’s more decentralized.

So, Tim pushed the community to decide in 3 days what would be the best way to decrease the daily node reward costs (and reached out to 14 node farmers) without knowing how many nodes are even needed (and knowing anything about the optimal node distribution)… the only thing that mattered was to cut costs (and for the node farmers it was to run as many profitable nodes as possible).

Well, inside this Community we discussed the possible negative effects with respect to the quality and distribution of the nodes… Finally, Tim is now aware of this negative effect…

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And for those of you who thought that no investor would be interested in the PRE token at these low price levels, and that acquired VC should only be used for cash payments for developments and marketing…

This is what Tim announced in the “unofficial trading TG”…

Another major VC reached out to set up a meeting last night. That’s two, very large household names that have now come to us!
They are not only impressed with the changes we’ve made recently with the reorganization, but seem to be feel quite strongly that the token is seriously undervalued. They are interested in making an equity investment and then running their own token-accumulation play.
More info (to the extent we can release it) on Friday!

But the most interesting thing is that these guys are finding us before we’ve even completed the deck,
With three kinds of staking, PRE has more utility than any token out there, which makes them very comfortable accumulating.
Very interesting development!

So, should it be possible for the team to buy tokens on the open market (as needed for the daily PRE rewards) as long as the price is below the threshold?

The answer is YES.

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23

First of all node farmer is not the right term to refer to a person who has a lot of nodes because there are also other people who have a lot of nodes, he decided to do that because of the constant messages from people regarding the decrease of the rewards, you can see it as a measure of commitment to the project, you can see it as a measure so that the rewards do not have a visible decrease of the rewards (you have to take into account that the higher the amount of nodes the reward decreases because the reward pool is distributed among all those nodes), what I do see from some people is that any measure of the team is attacked immediately, we know that the decrease of the rewards is not liked by people but as we have already said it is a necessary measure to maintain the sustainability of the project, and that is something that everyone in the team recognizes.
Each person decides the amount of pre in which he is going to invest or the amount of nodes he is going to run, that is the case in any kind of investment.

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24

My definition of a node farmer is…

a node operator that tries to maximize his staking APY by running as many nodes as possible (and staking the absolute minimum 1k, 2k, or 4K PRE per node) by taking advance of the higher monthly PRE node search rewards (i.e. for the actually performed searches, not the staking part) in relationship to the (lower) monthly VPS costs.

Based on Tim’s chats, I think to conclude that Tim is/was a node farmer (in accordance with my definition).

I have nothing against any node farmers. They act economically and are free to do so.

I only want to emphasize the possible negative effects with respect to the quality of the nodes and the centered distribution (as a result of operating many relatively “cheap” VPSes via the same provider, and server location).

This negative effect has been discussed by many others in this Community.

BTW, I came up with the term “farmer” as this term is/was often used by the team and the admins for “token farmers”.

These “token farmers” try to get as many PRE tokens via searches while the “node farmers” try to get as many PRE tokens via running nodes.

So, why shouldn’t I use the term “node farmers” if the team and admins are using the term “token farmers”? Not just for users who try to trick the system and violate the TOS, but a term often used for regular users as well who did like the PRE rewards.

Also, I’m not attacking the team (read Tim) because he wants to reduce the node staking rewards.

I have no problems with the dollar cutdown, but think that the team should also look a the negative effects on the mentioned lower quality of nodes and centered distribution.

But I do have a problem with the $20K and minimum $0.07 price that is being used as explained in this discussion.

The actual daily costs are not $20K but just $8K (0.028/0.07*20K). So, by using this “calculation” method, the team is already “saving” on node reward costs.

My proposal is to “lock in” the lower $8K amount by actually buying the daily needed PRE for rewards on the open market. This way the PRE price will probably increase and more nodes will stay “profitable” for the actual search rewards part.

And yes, I’m looking at everything the (new) team is doing. I’m seeing the good, the bad, and the ugly.

My intention is to come up with ideas and proposals to improve things.

I don’t doubt the intentions of the new team… but sometimes it’s good to have a discussion first and to think about the best way of communication, and just take a little bit more time.

For me, about the communication… that’s not via a post by the CEO inside the “Unofficial Trading Group” about dismantling of 2,000 nodes for “diversification” reasons…

Although the intention may be good to “compensate” node stakers for the $1500 decrease… the (possible implied) negative signal could be…

“We don’t think that the upcoming decreasing PRE Node Staking APY is interesting enough and we are going to sell our PRE tokens and diversify the money in other (staking) tokens”

If inside this Community, there were upfront objections or warnings for negative (side) effects of the new management “actions” that could have been avoided… It’s just very frustrating to see that the new management is rushing to implement them and doesn’t “listen” to this Community

Complaining about this behavior is not attacking the team immediately, but trying to open up their eyes that this Community can be of value to them by using the “wisdom of the crowd”.

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“Token farmers” are only ever referred to in this way by someone violating TOS not regular users. Never heard this in TG and been around a while. Been here when there was only like 7500 nodes or less.

Tim has been involved since 2017, even earlier. If investing $10k early you would have gotten (even not at ATL) just say at $.02 500k PRE enough to open actually 500 nodes instantly. $50k which may be nothing for Tim and others would have gotten 2500 nodes and opening new ones ever since. All just speculation of course. This would be huge start for Presearch as Nodes are the core. So for them to start with 3-4k with the likes of someone like Tim doing his thing it was massive help to initial lift off before main net.

If you or anyone to was going to do something like this off the bat …it would only make sense to reach out to companies and tell them i need 2500 IPv4 512 MB 10GB …what your best price. The truer decentralization would come later when people starting out with less nodes and home nodes started opening nodes.

He could easily have 5000 or more nodes if he kept rolling the earned PRE into more nodes after 3-5 years. A blessing for Presearch while still relatively young. Many are very likely to be cheap VPS, same provider and same location you speak of fearing others will SWITCH to. This will instantly lower the percentage of these types of VPS, so would’t you be happy?

Again new roles are coming soon and will need higher quality to support the roles. If those node runners are compensated just a slight bit more …they have no reason to switch to the cheaper ones.

To me this is his way of again personally doing a VERY positive thing for the overall health of Presearch. Massive nodes to help lift off, cutting back to help offset dollar drop in pool. I don’t care what he does with the rest. Obviously he is in it to win it and knows a thing or two about investing, tokenomics etc and what dumping on tight market would do to price. NOT WORRIED.

I think it’s an awesome show of commitment to Presearch overall and confidence in moves being made, while helping out nodes runners who have been not so happy (didn’t seem to be a lot - not even in all the groups) with reward cuts. If he spoke to 14 node runners …I was 1 of 14 I guess. Like all the others I also agreed this would be the best and easiest way to instantly help (7.5% drop) and also the easiest to change if needed going back. The other ways he mentioned would have been a total fiasco for Presearch and the Node runners.

He will likely bring up his 1k and 2k nodes to 4k. His choice but who cares.

As far as the whole .028/.07 … They are buy PRE on the open market now. More and more. I’m not sure i understand your theory of why this would be a benefit node runners staying profitable…as its just based on the PRE price PROBABLY increasing … Nodes are profitable now for me at $2 month each and will continue to be with 3 cuts and even 4. As my goal is accumulation it still works fine for me. I dont sell everytime I earn 1000 PRE. They are buy PRE now, revenue is coming in etc. I believe the price will go up and at over .07 the number of PRE paid out will decrease as it is tied to a max monthly dollar amount according to PRE price data the prior 5 minutes when a node gets a reward. THIS is what I hope changes at some point as original white paper …20% of profit will be distributed to node runners.

I think the points you are bringing up are based on a lot of assumptions, guesses etc. Again, I would say to all …can we give them more than 30 days before passing judgement?! Things are changing, will change again and may at some point a change may be dismantled or reversed with stats, community response etc.

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26

I’m sure some are upset with search rewards decreasing and I am sure there are others upset with the node rewards pool decreasing.

I already stated my thoughts on search rewards and stand by them. The changes should work for some time at reducing PRE outflows and possibly improving the quality of searches (I am personally not convinced of this as it is not costly to run code so IMO they will just continue to let it run). I still think there may be a point where this current search rewards construct may need to be changed again or even eliminated all together to include the search staking (how can the team know if a search is real or fake).

The node pool reductions are not actual $s out it’s PRE outflow. The planned reduction of the “$ pool size” is an accounting myth, since Presearch is not actively purchasing $20k or soon to be $17.5k of PRE everyday, so it is not a $ outflow and not a $ savings. They are simply reducing the rate of PRE outflows from the treasury, simply a reduction of token inflation.

Since there are no PRE utilities for token inflow, PRE will continue to outflow. Staking takes tokens out of circulation for some time and may help with reducing the supply for a time and may even create a little demand as well, BUT it does not solve token flow or put tokens back into Treasury. The only way tokens get back into treasury at this time is through PRE open market purchases or token creation up to the new 1B cap. To achieve success using this method you have to spend lots of money on marketing to try to increase users with currently so so USPs that are not sticky and at the same time try milk every $ of revenue out of those users. In hopes that one day some day we can milk enough revenue to be greater that the costs or marketing and greater than the costs of keeping the lights on so that the NET Profit if we ever get there can start to purchase more and more PRE to begin to reduce the outflows all before we run out of token creation up to 1B.

Will this work? Maybe, we all hope so because that seems to be the trajectory and plan so far from the Team. This is 1 of 2 primary ways of approaching and tackling the problem. I strongly support a different approach.

Knowing the above and without full transparency and information this makes the timing and prioritization of developments on the Roadmap very important. Specifically, I support a priority focus on token flow through development and implementation of enticing consumptive PRE utilities. Utilities that create Opportunity and new USPs in and of themselves. This approach once developed and initially implemented will each market themselves drawing opportunists and users alike. If these are consumptive and enticing those utilities alone would begin to reduce NET PRE outflows and over time even create a NET inflow of PRE to the Treasury. In this approach the goal is not necessarily quick user growth (although ironically I think it would create much faster and more sustainable adoption) but rather solving token flow first so that PRE becomes an income source instead of an expense or inflation. PRE that could be used to increase node rewards, referrals, or any other more beneficial actions, even sold in the open markets to continue developments in perpetuity.

The other goal in this method is being the first to market with these new USP Opportunities. It is integral to be the first to change the game. I fully intend Google and others to quickly follow suit unless they want to be like Kodak when digital photography came out and they chose not to participate; other smart search providers will take a play from Presearch and may even be able to implement a more professional version within a relatively short time because of resources. But when you are the game changer instead of them you are already winning. Then its Presearch is the innovator the others just copied. That is where presearch needs to be to gain attention and support. Presearch needs to be seen as the true pacing threat to Google that could actually take them on and it will be because of a different strategic vision for search not little ui features.

I get the need to take immediate action if the situation was dire and to bring outflows in closer alignment with inflows this is all basic business.

I like many community members were upset with the lack of communication and transparency especially as major changes are decisions were being made. And all without community buy-in.

There was a lot of questions, concerns, and lack of transparency prior to and throughout the transition. Major initial concerns were primarily a potential takeover and compromise of the projects vision, communication, transparency, and some strategic vision concerns with the roadmap as I have explained.

Communications are improving, the concerns of a takeover and compromise of values are reduced due to Colin and Tim’s comments on the DAO / INC structure and % of INC sold to VC so far. I am also happy Tim is bringing a few thousand of his nodes offline as that should make the PRE pool reductions less of an impact like I recommended in this forum. That should allow for better decentralization of node ownership.

However, we are still lacking a lot of transparency that should be shared. The team and project overall will be more successful with community buy-in and continually addressing community concerns. Understand can’t do everything but something even if small “community wins” are still very beneficial and impactful. I am starting to see some indications of this which is a good start. Lastly, I know everyone doesn’t agree with me but I will continue to say it anyway, I think token flow and PRE utilities are the game changers that need to be prioritized on the roadmap.

Trust has certainly been eroded but I am cautiously optimistic.

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With respect to token farming, I can show you chats where admins “assumed” and “accused” that a user was primarily using the Presearch platform to generate PRE tokens while in reality, these users were regular users where the search rewards were not their primary reason, or where regular users felt “mislead” by the cutdown in rewards.

Sorry, but you are just speculating about Tim’s role with respect to the number and timing of nodes.

FYI, the first node rewards PRE payout started on March 1, 2021, for node operators being active on the decentralized “test net” which went live in December 2020. (The main net went live on June 1, 2021).

So, I don’t know why you assume (or know) that Tim already was active as a node operator earlier than these dates (when there was no decentralized network).

Yes, he was mentioned in the original Whitepaper as “advisor”.

Afaik, before the “test net”, it was run centralized by the team without any involvement of Tim (or his team).

Also, the team published the number of gradually increasing node numbers in the early days … there was no initial start of “someone” who “opened 500 nodes instantly” (as you are presuming that Tim could have done).

So, your assumption that Tim helped to start off the node main net (with a bunch of nodes) is based on pure speculation, and not on facts.

For his cutting back of 2,000 nodes to help offset the dollar drop, his main argument was “diversifying”.

And you may not care what he does with the rest of the nodes… but I do care what he does with the unstaked PRE…

You are not worried that Tim will dump his unstaked PRE tokens on the market… Me either with respect to the dumping element (not with respect to “smart” selling)… but my point was…

The “unprofessional” announcement in the “unofficial trading group” leaves room for many “explanations”… normally, a diversification reason as mentioned by Tim… means that the unstaked tokens will be replaced with other ones.

And now he can say (one day later) that he won’t sell the unstaked tokens (as the PRE token price is too low), but his first message was “incomplete” and could lead to “FUD”, instead of the aimed positive signal. Especially, if posted in a group with “active” traders who often respond quickly to any announced activity by a management team member and the “largest” PRE token holder.

And your assumption that he will likely bring up his 1K and 2K nodes to 4K is based upon “nothing” and “speculation” as Tim announced that only a part of the unstaked PRE (as will fall free from the dismantling of 2,000 nodes) will be used for re-staking… the other part will be just kept by “his team” without staking (and won’t be sold)… just stating what Tim has been saying…

Nodes will not be profitable anymore at $2 per month.

The average PRE reward for the “actual assigned node searches part” in August was less than 2 PRE per node (and this will decrease due to the $1500 cutdown each month).

2 PRE per month at $0.028 PRE price level equals $1.68 per month.

And maybe, you have some quality nodes that will do just a little more than 2 PRE per day on average… but soon… these nodes will also be “losing” you money.

And the numbers will only go up if the revenue will increase. For now, we know that 1% will be used to buyback PRE tokens (not for paying out node operators).

So, we probably have to wait “quite some” time before the node rewards will be based upon income… Let alone, that the pay-out ratio will be based on 20% of profits.

Of course, nobody can predict and manipulate the PRE token price (in the long term)…

But by starting to stop the token inflation and buying up daily 250K PRE in the open market… this will lead to a continuous “buying pressure”… and using basic economics as supply and demand for a very low liquidity/volume token… this will lead to an expected price increase (that’s not speculation or guessing but just common economic sense).

And the current (1% revenue) buybacks are just so small in comparison to the daily number of PRE tokens coming into the market as a result of the search and node rewards, that you can neglect them.

Finally, yes, we must give the new team some time… but it doesn’t hurt to discuss new major changes upfront and inform the team about possible negative effects.

So far, I’m not impressed to see:

  • Daily searches from 4M to 2M today.
  • Thousands of lost regular users.
  • Killing of the affiliate program.
  • No incentive left to reward new and existing users.
  • Less community-driven and community-owned, and for the first DAO voting, we have to wait more than a year while in the meantime all decisions are made “centrally” by Tim and his team.
  • [Probably] Increase in maximum supply from 500M to 1B PRE tokens.
  • No transparency about “financials” and underlying reasons for cutdowns in expenses and rewards.

And I can continue but probably you got the idea.

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28

Agreed and this could change as soon as PRE inflow gets closer to or exceeds PRE outflow. At that point it doesn’t really matter what the price of PRE is .03, .07, or 1.07 because PRE inflows pay for the PRE out. Would not have to purchase with $s some absurd daily amount to reward the Network.

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